Credit rating mechanism is here to make online shopping easier (and difficult to a few) for Indians. The eCommerce giants in the country are putting up quite some innovative techniques. They’re creating models, which are running neck-to-neck to those in US, Europe and China, targeting young age groups of 22 to 28 years. There ways of banking and buying are way different from the traditionalists.
E-tailers and payment companies have now joined hands to work ways out wherein your online transaction history will be analyzed and credit scores will be provided which will enable you to get loans. Even to convert those purchases into EMIs, you need not worry of not having a credit card, as you can do it without even having one!
“EMIs will be restricted to high ticket price categories, for example on purchase of white goods, etc. In the instance when a customer does not have a previous credit history, we will evaluate their mobile phone bill payment for credit worthiness. We will only share the rating with banks and the user will be informed of the process,” said Amit Lakhotia, vice president — payments at Alibaba-backed marketplace and payment solution, Paytm.
In a similar move in China last year, Alibaba had issued virtual credit cards to its customers after having analyzed their transaction history. So this pattern basically works on credit system without having a credit card. This system would work great if they have apt modules to determine credit worthiness.
Tejasvi Mohanram, founder and CEO of RupeePower, digital finance services marketplace, said: “We are utilizing non-traditional data to match the right customer to the lending agency. We will analyse the credit history of an individual when they ask for a loan or EMI. It will be used by banks as a back-test where they will match traditional credit scores with the learning from non-traditional data.”
These services had first come up in US and Europe under interesting taglines like Bill Me Later. But after some mishaps, they shut down. Indians are being very cautious as it does involve some serious risk as much as it has the scope for booming. They also need to handle customer data and privacy with much caution and respect.
This will also result in people making more transactions than average to maintain a good score, especially those who do not own credit cards and are aiming to make big purchases using the system.
“Our product will give the customer a decision in 15 seconds flat on whether they are eligible for credit or not,” said Jitendra Gupta, founder of Citrus Payment Solutions. “We will assign credit scores to customers on our database, using our analytics engine. We will only tell the bank whether the customer is eligible or ineligible for the loan. Disclosing credit score will be unethical,” he added.
This baby in India will be having all new experiences. The credit rating systems of various companies will be judged and tested. A plethora of new choices and convenient payment options like these will lure the common man towards the bait, we can only hope he’s not trapped!